austin3515

I will just add that a company in financial distress who makes a good faith interpretation of the rules intended to benefit its lower paid employees should be viewed especially favorably in these incredible times. IT would be bazaar to penalize a company that maintained such a generous match when the you know what is is hitting the fan. Are there any IRS Q&As coming up? Boy would this be a great question for that.

Are people using the special extension box now for this COVID 19 extension on (for example) a 6/30/19 plan year end? And are you just typing in COVID-19 or coronavirus or what? HAve they told us what to write?

I guess I can see your point. Here is what I am doing. Waiting or the IRS to tell us what they expect. It damn well better be practical. I would love to hear from anyone who works for one of the major recordkeeepers to learn what they are doing (and what their capabilities are). No way they can reusme payments on 1/1/2021 and increase payments again in April. Just not possible. That's what I think.

The delay is not between now and 12/31/2020. The delay is between the date that today's payment was schedyled, and the date 12 months from now on which the payment becomes due. The payment are "deayed for 1 year." The statute goes on to say that that 1 year period does not count towards the 5 year max.

Why wouldn't you use the whole year?

Thank you! The difference is NOTHING. Nothing compared to the sheer impossiblity of a recordkeeper doing that correctly. It's just impossible, and the difference is like 4%. Even if the recordkeeper culd do it, the client cannot be expeted to a) begin payments in January 2021, and then b) increase payments in April 2021 for Joe, May 2021 for Steve, and June 2021 for Bill. By the way, my amortization schedule just smooths out RatherBeGolfing's method.

I run my "negative am" schedule through 1/1/2021. When is the end of the 6 year period? Amortize the 1/1/2021 balance over the remainder of the 6 year period. I just think this is so critical. If the recordkeeping is a nightmare, especially for a small plan without a big fancy recordkeeper, then clients shnould be advised not to allow this. You can;t just kick the can down the road on this. You need to know what you're buying when you sign off on the deal.

"I agree that my interpretation is impractical - but show me how to interpret it otherwise." When I tried to follow the statute as closely as possible what I found was that the payments only shifted a de minimis amount. The statute says to reamortize - not to double payments in 12 months. If you take any reasonable approach at reamortizing you're going to find the payments don't change by much at all. Hence my approach is a very close approximation of what the statute says. Go ahead and try it, you'll see what I mean.

while I'm sure your interpretation is correct, can we all agree that the treatment is impractical? Also, I believe the statute calls for a reamortization of the delayed payments at some point.

Has anyone looked at my amortization schedule in the original post? If there is another way to do this I would be curious. It is so hard to follow this conversation without seeing amortization schedules. At the end of the day the question boils down to “what will the amortization schedule look like?”

Relius said theirs will be ready ASAP. The reality is that clients know there employees are in dire straits and want to let them know what the options are that are now available. Anyway I guess we are all on the same page on that front.

What is the difference really between this and SMM?

So client amends the plan to add all of these wonderful new options. What are the obligations to tell the participants about the options? I happen to think we should be telling them about the options proactively. Perhaps that is based on more on ethics than law though. What is the law?

Well clearly it can do no harm to formally document a corporate action. I guess I'm in the minority but I want to document the corporate action myself.

My understandings is that the way corporations dcument discretionary actions is through Board Resolutions though. Is that incorrect?

Are people recommending a board resolution to discontinue a discretionary pay-period match? How about to start a discretionary pay-period match? I have always done it, and there is a bit of a disagreement in the office of how important it is.

Good news, you are wrong. If the rules were the same as leave of absence then this legislation would be moot. Disregarded means it doesn;t count. So the 12 months between now and pril 2021 are DISREGARDED for the 5 year rule. That means if you are 2 years in today, you are 2 years as of April 2021.

It is time sensitive though. Clients need to know how this will work before they sign up for it and allow it. Whether paymetns a) commence on 1/1/2021, and b) have to be increased on some subseuqent date after the 12 month delay is a critical question. Systems have to be in place, etc.

Someone besides me? I wold love to see it if anyone knows where it is? Do you think mine is ok?

Well in the current situation, lost wages would be easy to verify. The client can tell us that. That's plenty of support since they already have all of the records.

1. (7) Expenses and losses (including loss of income) incurred by the employee 2. We do that for our clients on the hardships. We get the documentation from the participants.

That is not correct, the are very clear that the 5 year term is now 6 years. (C) in determining the 5-year period and the term of a loan under subparagraph (B) or (C) of section 72(p)(2) of such Code, the period described in subparagraph (A) of this paragraph shall be disregarded. It says that 12 month period is DISREGARDED for the 5 year max. That means you get 6 years to repay. But for some reason no one is talking about this. i can't believe no one is talking about how this actually works. I can;t even get the recordkeepers to answer the question.

not all clients are adding the CARES Act stuff.

for me this is enough to approve a hardship distribution. They may not qualify for any dollars from FEMA because of whatever it is that that means, but I'll approve hardships based on that.

Shout out to Derrin Watson who on the ERISApedia webcast today provided an important clarification regarding hardship distributions under the FEMA provisions, as described below. The definition is more specific then I had realized. Abridged version of the reg: (7) Expenses and losses (including loss of income) incurred by the employee on account of a disaster declared by the Federal Emergency Management Agency (FEMA) …provided that the employee's principal residence was located in an area designated by FEMA for individual assistance with respect to the disaster. How do we know if the state was in a FEMA disaster area that was designated for Individual Assistance? Go to this website: https://www.fema.gov/disasters From the state drop-down, select the State . Click on the “Apply" button. Click on the link for Covid-19 Pandemic (if there is one!). Make sure you click on the most recent one! Go to the Financial Assistance section. If it says “Individual Assistance” then the employee is eligible for these hardship distributions. If for example it only says “public assistance” then it does NOT qualify.